U.S. Supreme Court justices were skeptical of claims that the president has the authority to impose broad and sweeping tariffs under the International Emergency Economic Powers Act during Nov. 5 oral arguments for two consolidated cases. Learning Resources, Inc. against trump i Trump vs VOS selections.
Construction groups have already begun to see impacts from various tariffs – some imposed under different laws than the IEEPA – on steel, aluminum and other materials, although most have only been in place for a few months at most, industry groups say.
“Constant changes in rates, effective dates and other provisions have made it difficult for contractors to price projects and likely led owners to postpone the future until they know their input costs and the demand or need for structures,” Ken Simonson, chief economist for the Associated General Contractors of America, said in an email.
Slowdowns are being seen in architectural billings, a key indicator of strength in downstream construction markets, and material prices have risen at a time when construction spending is easing, although the data center and energy sector markets are softening the contraction to some extent, Anirban Basu, chief economist at Associated Builders and Contractors, said in an interview with ENR.
The justices did not seem inclined to agree with the Trump administration’s central argument, offered by Justice Department Attorney General John Sauer, that language in the federal law that gives the president the authority to “regulate importation” can be interpreted to mean the president also has the authority to impose tariffs during a national emergency. Sauer said Trump concluded earlier this year that “exploding trade deficits” and the trafficking of fentanyl and other opioids have created a national emergency because they are threats to national and economic security.
But several of the justices, even among the court’s conservative majority, were skeptical. Associate Justice Amy Coney Barrett asked Sauer, “Do you hold that all countries should be subject to tariffs because of threats to defense and the industrial base? I mean, Spain, France? I saw that with some countries, but tell me why so many countries should be subjected to the reciprocal tariff policy as they are.”
Sauer’s arguments were largely based on the fact that President Richard Nixon imposed blanket tariffs on all major trading partners in 1971 as a bargaining tool. Two years later, Congress enacted the International Emergency Economic Powers Act with the words “to regulate importation,” which Sauer said was a codification of Nixon’s actions.
Chief Justice John Roberts said: “You have asserted a source in IEEPA that has never before been used to justify tariffs. No one has argued that it does until this particular case. Congress uses tariffs in other provisions, but not here.”
Associate Justice Brett Kavanaugh said: “One problem you have is that presidents since IEEPA have not done that. Your primary response, or one of your many responses to this, is the Nixon example.”
Neal Katyal, arguing on behalf of the private companies in the cases, said the IEEPA is the wrong vehicle for imposing tariffs, because tariffs are essentially taxes. “IEEPA is a sanctions statute. It’s not a tax statute where Congress gave up shop,” he said, adding, “Although presidents have used IEPPA to impose economic penalties thousands of times, no president in the 50-year life of IEEPA has tried to impose tariffs,” and that the president skipped statutes that directly authorize tariffs that directly authorize them.
ABC economist Basu notes that even if the Supreme Court rejects the administration’s arguments, it’s hard to know how the construction industry will be affected because it’s nearly impossible to predict how the president will respond. “If, in fact, the Trump administration simply authorizes new rates based on new sections of the code, there really isn’t much economic change[forcontractors”hesaysBut”IftheTrumpadministrationdecidesitcan’trespondthatwaybecausethecourthasissuedarulingthatmakesitdifficultfortheTrumpadministrationtoreplacethosetariffsthroughothermechanismsthatmeansfuturereliefforcontractorswhobuyconstructioninput”[forcontractors”hesaysBut:“IftheTrumpadministrationdecidesthatitcan’trespondthatwaybecausethecourthasmadeajudgmentthatmakesitdifficultfortheTrumpadministrationtoreplacethosetariffusingothermechanismsthenthatmeanssomeforward-lookingreliefforcontractorsbuyinginputstoconstruction”[peralscontractistes”diuPerò:”Sil’administraciódeTrumpdecideixquenopotrespondred’aquestamaneraperquèeltribunalhaemèsunasentènciaquedificultaquel’administraciódeTrumpsubstitueixiaquestsaranzelsmitjançantaltresmecanismesaixòsignificaunalleujamentdefuturperalscontractistesquecompreninputsperalaconstrucció”[forcontractors”hesaysBut:“IftheTrumpadministrationdecidesthatitcan’trespondthatwaybecausethecourthasmadeajudgmentthatmakesitdifficultfortheTrumpadministrationtoreplacethosetariffsusingothermechanismsthenthatmeanssomeforward-lookingreliefforcontractorsbuyinginputstoconstruction”
